One of NYC's Most Historic Office-to-Residential Conversion is Moving Forward

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New York City is moving forward with its largest-ever office-to-residential conversion, transforming Pfizer's former Midtown headquarters into a massive residential complex with over 1,600 apartments.

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One of NYC's Most Historic Office-To-Residential Conversion Is Moving Forward

The largest conversion of an office building to a residential building in New York City’s history recently took a big step forward. Developers of the project have closed on a $75 million predevelopment loan for the project, which will see pharma giant Pfizer’s former headquarters and an adjacent building in Midtown transformed into a massive residential complex totaling more than 1,600 apartments.

The senior mortgage acquisition predevelopment loan was backed by the former Pfizer HQ building, 219 E. 42nd St, and was provided by Northwind Group, a Manhattan-based real estate private equity firm. A joint venture of companies affiliated with Metro Loft Management and David Werner Real Estate Investments is behind the historic conversion project, which is located in the heart of Manhattan, not far from Grand Central Terminal and the Chrysler Building.

The first office building 219 E. 42nd, will be redeveloped into a much taller luxury rental building, rising 29 stories and with a planned 660 units. The other building that is part of the project, 235 E. 42nd, will have somewhere around 700 units. Pfizer chose to leave its former headquarters back in 2018 when it announced it was relocating to Tishman Speyer’s The Spiral building in Hudson Yards. 

Metro Loft is no stranger to conversions. The firm has a history of converting offices to residential use in Lower Manhattan, where many of these kinds of transformations took place in the years following the 9/11 attacks. Since 1997, the development firm says it has converted more than 5 million square feet of commercial-to-residential conversions. Another project currently in the works by the firm is 25 Water Street, a 1,300-unit conversion that is also one of the largest office-to-resi conversions ever to take place in NYC. 

Office conversions have been one of the most talked-about solutions to vacant office woes since the pandemic emptied out business districts across the country. But as many reports have shown and industry professionals have explained, they are not an easy fix. Many buildings are not good candidates for conversions, and even with the ones that are ideal, the price tag can be costly. In fact, the latest trend has office owners choosing demolition instead of conversions.

It’s not entirely surprising that some of the largest conversion projects are happening in New York. It is, after all, the country’s largest office market, and it has faced the same challenges with rising vacancy rates and emptied-out buildings that many other markets have struggled with. But the city’s ongoing housing crisis is certainly helping push projects like these forward, as are new city programs to encourage and incentivize office-to-housing conversions. 

But despite programs to ramp up more office-to-residential conversions in NYC and other markets in the U.S., these kinds of reuse projects may be falling out of favor nationwide; the latest data on conversions shows that repurposed hotels represent 36 percent of all conversions, while office to residential conversions account for 28 percent of all conversions.

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